White and Williams LLP Secures a Clean Sweep Dismissal of Architect's Professional Liability Coverage Lawsuit

Case Results

Daniel E. Bryer and Brendaliz Minaya Ruiz

8.13.26

White and Williams LLP achieved a complete dismissal of professional liability coverage claims through a strategic defense led by Insurance Coverage and Bad Faith Practice Group attorneys Daniel E. Bryer, Partner and Brendaliz Minaya Ruiz, Associate.  

In a nuanced action styled, Vincent Cusumano Architect P.C., et al. v. Berkshire Hathaway Direct Insurance Company, et al., decided in the U.S. District Court for the District of New Jersey, plaintiffs asserted twelve pre-contractual and contractual-based causes of action against their liability insurer, Berkshire Hathaway Direct Insurance Company, and its insurance agent (collectively, “Defendants”) for denying a professional liability claim arising from plaintiffs’ prior work.

Plaintiff Vincent Cusumano, a licensed architect specializing in large-scale projects, and his firm, were sued for damages resulting from alleged professional negligence in connection with the renovation of a commercial property from November 2017 and January 30, 2023. The underlying action alleged that plaintiffs’ negligence was discovered in or around March 2021, though the negligent acts are alleged to have continued through the completion of the project in 2023.

In 2021, plaintiffs procured an insurance policy from defendants to replace their previous professional liability policy. The policy purchased provided errors and omissions coverage for claims stemming from prior work, if plaintiffs: (1) first learned about the claim during the policy period, and (2) maintained continuous insurance coverage that would have covered the claim. However, plaintiffs allowed their prior professional liability insurance to lapse in November 2021 – three months prior to the issuance of the policy at issue; a fact plaintiffs did not disclose to defendants during the application process.

When plaintiffs sought coverage for the underlying action, defendants denied coverage on the grounds that plaintiffs did not meet a condition precedent to coverage for prior work (i.e., maintaining continuous coverage). Following an amendment of the complaint, plaintiffs asserted twelve counts against defendants: (1) declaratory judgment pursuant to N.J.S.A. 2A:16-50, (2) breach of contract, (3) promissory estoppel, (4) quantum meruit, (5) bad faith, (6) fraud, (7) negligent/intentional misrepresentation, (8) violation of the New Jersey Consumer Fraud Act (“NJCFA”), (9) malpractice, (10) negligence, (11) breach of fiduciary duty, and (12) contract reformation.

White and Williams LLP, on behalf of defendants, filed a motion to dismiss / motion for judgment on the pleadings – strategically relying upon documents and recorded-phone calls incorporated by reference in the plaintiffs’ amended complaint. The Court dismissed all counts of the Amended Complaint with prejudice. Notably, the Court rejected plaintiffs’ contention that the “occurrence” took place during the policy period. The Court adopted defendants’ argument that the progressive property damage alleged in the underlying action took place when the plaintiffs’ negligence was first discovered in March 2021 – prior to inception of the policy. As such, the Court concluded that the “occurrence” alleged in the underlying action took place outside of the subject policy’s policy period.

The Court also dismissed plaintiffs claims for fraud and negligent / intentional misrepresentation because plaintiffs could not establish reasonable reliance on the alleged misrepresentation. Specifically, the Court opined that even if defendants misrepresented the scope of coverage (which the Court found was not the case), the policy “expressly conditions coverage for claims arising from prior work on maintaining continuous insurance coverage” – terms plaintiffs had access to and were aware of as evinced by a phone call wherein plaintiff conveyed understanding of such terms.

Additionally, the Court held that plaintiff’s bad faith claim failed because: (1) defendants denied coverage under the plain language of the policy and (2) such claim was duplicative of plaintiffs’ breach of contract claim.

Finally, the Court held that Defendants did not breach any duty owed to plaintiffs. The Court noted that the record established that defendants had no duty to advise plaintiffs about the continuous coverage provision of the policy because defendants were unaware of plaintiffs’ gap in coverage. Further, defendants provided plaintiffs with the specific policy terms, which were read and acknowledged by plaintiffs prior to the binding of the policy.

Because plaintiffs failed to state a claim against defendants, and any further amendment of the complaint would be futile, the Court dismissed the lawsuit with prejudice.

If you have questions about this case or would like additional information about the attorneys involved, please contact Daniel E. Bryer, Partner and Co-Chair of the Insurance Coverage and Bad Faith Practice Group (bryerd@whiteandwilliams.com; t.201.368.7238), or Brendaliz Minaya Ruiz, Associate in the Insurance Coverage and Bad Faith Practice Group (minayaruizb@whiteandwilliams.com; t.212.631.4414).